An important tool for maintaining internal controls and a strong finance department is to have an accounting policies and procedures manual. While it takes some time to write up, it will help you maintain consistent practices and stay compliant will relevant laws and regulations. Having written policies and procedures will help your accountants and finance staff understand what’s expected of them and the accounting rules and methods they need to follow. This will feed into data integrity in your accounting system and the quality of financial reports.
When you have a written manual, you won’t lose institutional knowledge when someone leaves the organization, and it will become a training document for new staff so they can get familiar with your accounting system and practices. It’s also a reference for long-time staff to remember how important processes work, especially those that don’t come up frequently.
In addition to day-to-day routines, the manual should cover policies and internal controls you use to mitigate the risk of financial misstatements or fraud. This could include things like having a manager review AP invoices before posting them, dual signatures for large checks, details of how you segregate duties, and policies surrounding whistleblowers, conflicts of interest, gift acceptance, and document retention. Make note of the job roles you have in the accounting department, the responsibilities and job descriptions for each role, and the software(s) you use. You won’t have to revamp your manual very often, but make sure to update it when there are significant changes.
The manual should be written by someone who is deeply familiar with the organization’s accounting system, how tasks are processed, relevant accounting principles to use, and financial reports used both internally and externally. The contents of the manual should be shared with accounting staff regularly, both formally (e.g. training new staff) and informally (e.g. when reviewing data being entered).
Some topics to include in your accounting manual are:
- An overview of the organization
- Purpose of the accounting manual
- General accounting policies
- Organizational chart of accounting and finance staff with their responsibilities
- Billing, cash receipts, accounts receivable
- Purchasing, cash disbursements, accounts payable
- Payroll
- Investments
- Inventory management
- Fixed assets, property, equipment
- Capitalization policy, depreciation methods, depreciable lives of assets
- Month-end and year-end close processes
- Financial statements: mid-year, year-end, external/public reports, internal reports for management
- Tax filings: unrelated business income tax, sales tax, property taxes, Form 990 and related state forms (nonprofits), income taxes (for-profits)
- Net assets: operating reserves, board designated assets, assets with donor restrictions
- Internal controls
- Budget processes
- Audit preparation
- Security and retention of financial data
An important tool for maintaining internal controls and a strong finance department is to have an accounting policies and procedures manual. While it takes some time to write up, it will help you maintain consistent practices and stay compliant will relevant laws and regulations. Having written policies and procedures will help your accountants and finance staff understand what’s expected of them and the accounting rules and methods they need to follow. This will feed into data integrity in your accounting system and the quality of financial reports.
When you have a written manual, you won’t lose institutional knowledge when someone leaves the organization, and it will become a training document for new staff so they can get familiar with your accounting system and practices. It’s also a reference for long-time staff to remember how important processes work, especially those that don’t come up frequently.
In addition to day-to-day routines, the manual should cover policies and internal controls you use to mitigate the risk of financial misstatements or fraud. This could include things like having a manager review AP invoices before posting them, dual signatures for large checks, details of how you segregate duties, and policies surrounding whistleblowers, conflicts of interest, gift acceptance, and document retention. Make note of the job roles you have in the accounting department, the responsibilities and job descriptions for each role, and the software(s) you use. You won’t have to revamp your manual very often, but make sure to update it when there are significant changes.